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Gold Sets For Weekly Drop As Investors Mull Over Trump Policies

Nov, 11th 09:31

Gold prices were on track to close this week lower for the first time in four weeks, down over 3 percent to trade around $1250.00 per ounce. The precious metal has been weighed by the economic outlook that is inclined to faster growth of inflation after Donald Trump unexpectedly won this week’s US presidential election on Wednesday.

Richmond Fed President Jeffrey Lacker said on Thursday that the Federal Reserve could raise interest rates more quickly if the government cut taxes or reinforced spending to boost economic growth. The latest US jobs data which showed the number of Americans filing for unemployment benefits fell more than expected last week, strengthened the labor market’s outlook.

Gold is highly sensitive to rising rates, as higher rates lift the opportunity cost of holding non-yielding assets such as bullion. Meanwhile a firmer the dollar makes the yellow metal less affordable to buyers holding other currencies.

According to SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, gold holdings at this fund dropped 1.40% to 941.68 tons on Thursday from 955.03 tons on Wednesday.


Fig: GOLD D1 Technical chart

After peeking out of the 23.6% Fibonacci level at 1297.59 on Wednesday, the metal pulled back to re-attempt the other Fibonacci retracement at 38.2%, the level that supported gold prices in early October. Long lower shadows in recent candles showed that buyers are preventing gold prices from falling too deep. RSI index that is pointing downwards may support for the downtrend but the 38.2% should be watched as a firm stance for gold to reverse higher.

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